Carter v. Whitcomb

• Decision Date: 07 April 1908
• Citation: 74 N.H. 482,69 A. 779
• Parties: CARTER, State Treasurer, v. WHITCOMB et al.
• Court: New Hampshire Supreme Court

69 A. 779

74 N.H. 482

CARTER, State Treasurer,

v. WHITCOMB et al.

Supreme Court of New Hampshire. Hillsborough.

April 7, 1908.

Transferred from Superior Court, Hillsborough County; Peaslee, Judge.

Proceedings by Solon A. Carter, State Treasurer, against Mae E. Whitcomb and another, executrix of Susan E. Reed, deceased, to subject legacies to the inheritance tax. The probate court decreed that the legacies were not subject to the inheritance tax, and plaintiff appealed. Facts found by the court and cause transferred from the superior court. Case discharged.

Susan E. Reed, a resident of Nashua, died September 21, 1905, and the defendants were appointed executors of her will. Among the legatees named are the Main Street Methodist Episcopal Church of Nashua, the Ladies' Social Circle, the Senior Sunday School, the Junior Sunday School, the Auxiliary of the Woman's Foreign Missionary Society, the Home Missionary Society, the choir, the Epworth League, and the Junior League, all said societies being connected with the Main Street Church, also, the Young Women's Christian Association of Nashua, the Auxiliary of the Young Men's Christian Association of Nashua, the Protestant Home for Aged Women in Nashua, the Day Nursery in Nashua, and the Women's Relief Corps of Nashua. April 20, 1907, the probate court decreed that these legacies were not subject to the inheritance tax provided in chapter 40, p. 432, Laws 1905, and the plaintiff appealed.

Edwin G. Eastman, Atty. Gen., and Joseph S. Matthews, for plaintiff. George B. French, for defendants.

WALKER, J. By the statute in force on the date of the death of the testatrix, "all property within the jurisdiction of the state, * * * which shall pass by will, or by the laws regulating intestate succession, * * * except * * * to or for the use of charitable, educational, or religious societies or in stitutions in this state the property of which is by law exempt from taxation, * * * shall be subject to a tax of five per cent. of its value, for the use of the state." Laws 1905, p. 432, c. 40, § 1. Before the decree of the probate court in this proceeding, this statute had been amended by the Legislature of 1907 by apparently making the exemption of legacies to such institutions from the tax or impost to apply only "when such society or institution is bound by the terms of the will, * * * or by the limitation of its powers, to devote such property solely to such uses and purposes that the property in its hands will be by law exempt from taxation." Laws 1907, p. 66, c. 68, § 1. Under the former law, no inheritance tax was chargeable upon a legacy to a charitable, educational, or religious society which enjoyed, under the law, immunity from taxation upon its property. The use to be made of the fund bequeathed to such a society was not deemed to be important; at least, it was not regarded by the Legislature as so essential as to be declared to be the test of the exemption. Under the latter statute, it would seem the exemption attaches in such a case only when it appears that the money or property donated must be devoted to such uses by the society that it will be exempt from the general, yearly tax burden. That the Legislature intended by this amendment to introduce into the law a material change is too plain for argument. Its purpose was to restrict the exemption within narrower bounds that those set by the former statute. The claim made by the plaintiff, that the amendment is merely declaratory of the meaning of the original statute, cannot be sustained upon any reasonable construction of legislative action; and, if sustained, it might not be of controlling importance in a judicial finding of the legislative intention evidenced by the act of 1005. It is plain that the two acts do not mean the same thing. Nor was it the intention of the Legislature of 1907 to repeal the statute of 1905. While it re-enacted the latter statute, with the material change above suggested, it did not in terms attempt to repeal it; and no reason is apparent why it should. It was seeking to perfect legislation upon a comparatively new subject; and it accomplished its purpose by enacting an amendment to the old statute in a single particular, "so that said section shall read as follows." To hold that this amounted to a repeal of the former statute would be to give no force to the evident intention of the Legislature. Matter of Prime, 136 N. Y. 347, 32 N. E. 1091, 18 L. R. A. 713.

Equally untenable is it to urge that the amendment of 1907 was intended to have a retroactive effect, and to apply to estates then in course of settlement. The language used is prospective. It relates to property "which shall pass by will." The testatrix's will became effective to pass property upon her death. The necessary delays incident to the settlement of the estate and final decree of distribution did not postpone the passing of the estate within the meaning of the statute. The legatees derive their title from the testatrix. Their rights became fixed at her death. They then became the owners of the property bequeathed to them, though the possession and actual enjoyment thereof were delayed by operation of law, and at the same time the right of the public to the tax accrued. As the legatees' interests vested at the death of the testatrix or upon the probate of the will (Brown v. Brown, 44 N. H. 281; Ordway v. Dow, 55 N. H. 11; Sanborn v. Clough, 64 N. H. 315, 10 Atl. 678), there is little ground for holding, in the absence of express language to that effect, that the Legislature intended the amendment of 1907 to have a retroactive effect, and to defeat or limit rights so vested under testamentary provisions. The construction and effect of a will are ordinarily governed and determined by the law in force when it became effective. Loveren v. Lamprey, 22 N. H. 434; Wakefield v. Phelps, 37 N. H. 295, 306; Perkins v. George, 45 N. H. 453, 455; Morgan v. Perry, 51 N. H. 559, 507. The rights, therefore, of the parties to the suit under the will in question, must be determined in accordance with the statute of 1905, which was in force when the testatrix died and when the interests of the parties under her will vested.

In this view of the case, the question arises whether the bequests to the defendant associations and societies are exempt from the tax imposed by the statute of 1905. In the language of the statute, if they are "charitable, educational, or religious societies or institutions in this state," and if their property "is by law exempt from taxation," the bequests to them are not subject to the tax; otherwise they are. If the meaning of the statute is that the exemption only applies when the association, falling within the terms of the statute in other respects, holds all its property free from yearly taxation, practically the exemption, which was intended to foster and encourage such institutions would be found to apply to a rather peculiar and limited class. Matter of Vassar, 127 N. Y. 1, 10, 27 N. E. 394. Most charitable institutions whose property "is devoted exclusively to the uses and purposes of public charity," and which is "exempted from taxation" (Laws 1895, p. 426, c. 66), may own property, not exclusively devoted to charity, which is subject to the general tax burden. The use that is made of the property determines the question of its taxability under the statute quoted. Some of it may be exempt from taxation, while the rest of it is not. Such a society may own real estate which is not directly used in carrying on its charitable work, as, for instance, it may rent real estate for business purposes (Phillips' Academy v. Exeter, 58 N. H. 306, 42 Am. Rep. 589; New London v. Academy, 69 N. H. 443, 446, 46 Atl. 743; Young Men's Christian Ass'n v. City of Keene, 70 N. H. 223, 46 Atl. 186) and be subject to taxation therefor. It may invest money in savings banks, which thereupon becomes taxable. But the fact that it may own taxable property, or that it in fact does own such property, does not prove that the Legislature did not intend to include such an institution of a charitable character within the favored class. In consideration of public benefits conferred by such establishments, and in view of the fact that their property is substantially used directly in the promotion of public charity, is unproductive of profit or gain, and is not when so used taxable, it was the policy of the Legislature to exempt them from the burden of the inheritance tax. If their general property is exempt from taxation under existing statutes, general or special, bequests to them are not taxable merely because it appears that they own incidentally property that is taxable. Nor does it appear that the Legislature intended that a legacy to a charitable association should be subject to the succession tax if, when received, it might be invested in taxable property. The sole test suggested by the language of the statute in its application to the subject-matter is to ascertain whether the legatee is a charitable, educational, or religious society, whose property, when used exclusively in carrying out the purposes of the association, is exempt from taxation. It is the character of the institution, the purposes it was organized to accomplish, and its liability or nonliability to taxation for property devoted to those purposes that determine whether it falls within or without the exception provided in the inheritance tax law. This result accords with the view adopted by the court in First Universalist Society v. Bradford, 185 Mass. 310, 70 N. E. 204, in which a construction was given to a statute of that state which is identical with the statute in question. With reference to the clause under consideration, the court say (page 313 of 185 Mass., page 205 of 70 N. E.): "But we are of opinion that the exemption depends upon this question: Is the society or institution one whose property is generally exempt from taxation? And that the...